"If Redevelopment Is Restricted, Home Sale and Jeonse Prices Will Soar," Academics Warn of MOLIT's 'Quota System'

Criticism of the Special Act's "annual cap on permitted redevelopment volume"
"Insufficient basis for the ministry's criteria"
"Applying it to Seoul would reduce permitted redevelopment volume to zero"

Experts have warned that the “annual cap on permitted redevelopment volume” introduced by the Ministry of Land, Infrastructure and Transport under the Special Act on the Maintenance of Aging Planned Cities could effectively bring housing supply at redevelopment sites in Seoul and elsewhere to a halt.

Kim Junhyeong, a professor in the Department of Real Estate at Myongji University, criticized the Ministry of Land, Infrastructure and Transport's relocation policy and the volume of redevelopment permitted under the Special Act on the Maintenance and Support of Aging Planned Cities at a roundtable titled "What Is Wrong with Relocation Plans for Redevelopment Projects?" hosted by the Korean Urban Real Estate Association on the afternoon of the 13th.

Photo by Sim Seonga###

Kim Junhyeong, a professor in the Department of Real Estate at Myongji University, criticized the ministry’s relocation policy and the volume of redevelopment permitted under the Special Act at a roundtable titled “Relocation Measures for Redevelopment Projects: What Is the Problem?” hosted by the Korea Urban Real Estate Society on the afternoon of October 13.

Earlier, the ministry established the “annual cap on permitted redevelopment volume,” which limits the number of annual project approvals by calculating the surrounding housing supply available to absorb relocation demand during redevelopment in aging planned cities, including first-generation new towns. Under the ministry’s relocation plan for the first-generation new towns, it assesses housing supply and demand within an approximately 10-kilometer radius of each new town’s center and spreads the pace of redevelopment over roughly 10 years.

In response, Kim said, “There is insufficient basis for the ministry’s 10-kilometer radius or its plan to spread redevelopment over 10 years.” He added, “The surrounding housing supply does not exist solely for households relocating because of redevelopment projects. Using it as a cap to restrict project approvals fundamentally blocks private redevelopment projects.”

Kim said, “If this system, which was applied to the first-generation new towns, is applied to Seoul as is, the permitted volume of redevelopment projects in Seoul would theoretically be zero.”

He continued, “The government has reduced the supply of jeonse housing in the market through regulations focused on owner-occupancy and lending restrictions, yet it blames the lack of relocation plans for redevelopment projects.” He argued, “Rather than blocking supply through artificial quotas, the urgent priority is to find public-sector support measures, such as easing regulations on the rental market.”

Experts also warned that calls to slow redevelopment could increase uncertainty around projects and further drive up home prices and jeonse and monthly rents. Jung Jaehoon, a professor in the Department of Urban Planning and Real Estate at Dankook University, said, “As the jeonse and monthly rental markets remain unstable, the claim that the large-scale relocation demand resulting from redevelopment will disrupt the rental market is gaining traction.” He argued, “But delaying project approvals will only increase uncertainty and project costs.”

“According to the Ministry of Land, Infrastructure and Transport, each month of delay in project approval generates 300 billion won in financing costs, which ultimately fall on homebuyers,” he said, explaining that “the resulting social costs amount to at least 3.6 trillion won a year as delays continue.” He added, “It is now impossible to designate new housing sites in Seoul.” He said, “If redevelopment projects are delayed, the scarcity of apartments in Seoul will push prices even higher.”

Finally, Jung stressed, “If calls to regulate the pace of redevelopment persist, both home sale prices and jeonse and monthly rents will surge together.” He added, “The first step is for the Seoul Metropolitan Government and the central government to work together to signal and assure the public that housing supply in the city center will continue.”

This content was produced with the assistance of AI translation services.